How to Start a Restaurant: An 11-Step Guide (Part 1) | Food truck operations
Many food truck operators are taking the big step by starting a brick and mortar restaurant. The key to ensuring a smooth expansion is to know as much as possible before taking such a big business step. Here’s part one of an 11-step guide that can get you started on the best possible basis.
Owning and operating a restaurant is a dream job for many aspiring food truck operators. It’s a dream that may have been put on hold as the pandemic has forced restaurants to stop eating inside or even shut their doors permanently.
Here is an 11-step restaurant start-up checklist that can help food truck operators grow into the traditional restaurant business.
Where to start
Starting a restaurant requires careful planning and is a more manageable feat when broken down into steps. Here are the top five. The other six will be featured in the second part of this feature film next week.
1. Choose a restaurant concept and brand
If you’ve been dreaming of opening your own restaurant, you’ve probably thought about simply expanding your food truck offering. But there is an opportunity to create a new restaurant concept. Your concept should include the type of restaurant you want to open, the style of food you will be serving, and the style of service you will use. The interior of your restaurant should also be in keeping with your concept. Here are some examples of restaurant concepts to stimulate your creativity:
- A ghost kitchen concept that serves up vegan comfort food for delivery only.
- A fast, casual restaurant specializing in make-your-own ramen bowls.
- A gourmet restaurant with a traditional French menu.
- Your restaurant brand is more specific and can be thought of as how you choose to communicate your mission and identity to the public. Your restaurant name, logo, menu design, and merchandise should all present a cohesive image of your brand. The advertising channels you use should also rely heavily on your brand identity to influence style and method.
- If you already have a location in mind for your business, the region’s demographics should be used to shape your concept. If you start with the concept first, you should choose a location with a demographic that can support it.
2. Create your menu
Developing your menu is the next creative step in the process of opening your restaurant. Choosing which menu items to present should be enjoyable for any food lover, but be careful in your decisions. Your menu will dictate what kind of equipment you need, what skills you should look for in your staff, and what kind of audience you hope to attract. For example, if you are considering a dessert menu filled with delicate French pastries, you will need a pastry chef and the necessary supplies. If pizza is your thing, you’ll need dough mixers, fermenters, and experienced chefs who know how to handle pizza dough.
Also consider your demographics. If you’re getting a lot out of renting space in a college town, your restaurant menu should be geared towards college-aged customers. But if you don’t budge on your dream of creating an upscale menu, you need to choose a place where median personal income can support higher prices. When finalizing your menu choices, use our Menu Design Guide and Menu Pricing Resource to create an attractive and profitable menu.
3. Write a business plan for a restaurant
Starting a restaurant, like any new business, requires a solid business plan. This is the step that can become a stumbling block for those who are unfamiliar with business plans and the way they are written. Restaurant business plans are divided into sections that outline every aspect of your new business, from your restaurant concept to your finances. The purpose of the plan is to help you narrow down the finer details and summarize your business to potential investors. When you apply for restaurant loans, the restaurant business plan serves as proof that your business will be successful.
Here are the main elements of a business plan for a restaurant:
Abstract – This is the first section of your business plan, but it helps to write it down last and summarize the other sections you have already completed.
Company presentation and description – Use this section to write a more detailed overview of the company than what you included in the summary.
Concept and menu – In this section, describe all the details of your restaurant concept and menu.
Management and ownership structure – Describe your management and ownership structure. It is useful to use graphics as a visual aid.
Employees and staffing needs – It’s easy to underestimate the number of staff you need. Putting it on paper will give you a more realistic view of how many employees you need to hire to run your business.
Marketing and competitive analysis – This section of your business plan requires careful research. You will need to provide an analysis of the demographics and competition for the location you have chosen.
Advertising and marketing strategies – Use the marketing analysis you performed in the previous step to choose the right marketing strategies.
Financial projection and summary– When it comes to securing financing for your new restaurant, this section is the most important. Use it to provide sales forecast and break-even analysis.
4. Obtain funding for the restaurant
The next step necessary to start your new restaurant is to obtain financing. Most of us don’t have enough capital to cover the cost of opening a restaurant without financial help. Obtaining funding from outside sources will determine whether you can make your dream of owning a restaurant a reality.
Start by estimating the total start-up costs of the restaurant as well as the costs required for day-to-day operations. Use this information to create a budget and forecast the total cost of running your restaurant for the next year.
With your restaurant’s budget in hand, compare the total cost to the amount of capital you have to determine the financing you’ll need. Remember to include costs for licenses, equipment, building repairs, and staff salaries. Here are some ways to get financing for your new restaurant:
Traditional business loan – This type of loan is purchased directly from a bank. You will usually see lower interest rates and access to higher amounts of principal with a traditional business loan. However, collateral is required and you must have a high credit rating.
Business line of credit – Similar to a credit card, you can get approved for a maximum credit amount. Interest only accumulates when you use the money, although lending standards are higher, and you may not be able to borrow as much money as with other types of loans.
Small business loan– Although you can get a small business loan directly from a bank, many banks partner with the US Small Business Administration (SBA). You can receive a small business loan even with a credit limit, and the SBA guidelines are set to protect both the lender and the small business owners. A guarantee is required and approval may take some time.
Investors – Contact your network or register on a site like AngelList to find investors for your restaurant.
Crowdfunding – Sites like Kickstarter, FoodStart, Indigogo, and GoFundMe are great platforms for raising funds to cover your start-up costs.
5. Choose a location and rent commercial space
When choosing a location for your new restaurant, the following factors are among the most important:
Visibility and accessibility – Select a location with good visibility that receives a lot of vehicular and pedestrian traffic. Take into account the availability of parking and ease of access for cars and pedestrians.
Demographics – Your restaurant’s target market should match the demographics of the area.
Labor costs – The cost of your labor will vary depending on the location. In areas where the cost of living is higher, you will have to pay higher wages to attract good employees.
Local competition – You can learn a lot by looking at competing restaurants in your area. The key is to choose a location where similar restaurants are successful, but avoid an area saturated with restaurants that directly compete with your concept. When it comes to choosing a space, we recommend renting. This allows you more flexibility if you decide to expand or make other changes to your business when you first start out.
Check back next week for Part 2 of the 11 Step Guide to Starting a Physical Restoration Business.